Singapore's Tiger dismisses Jetstar-AirAsia alliance as "hot air"

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Tiger Airways has dismissed the alliance between its rivals Jetstar and AirAsia as a "publicity stunt" and "a lot of hot air".

"I think it's hilarious, I had a great laugh," says the Singapore-headquartered low-cost carrier's CEO Tony Davis. "It was nothing more than a publicity stunt in the middle of our IPO [initial public offering]."

Australia-based Jetstar and Malaysia's AirAsia signed an agreement in January, saying that they plan to co-operate in areas like the joint purchase of aircraft and ground and passenger handling services in order to cut costs.

Tiger was in the middle of promoting its IPO then, and made its debut on the Singapore stock exchange in January after raising S$247.7 ($176 million) from institutional and retail investors.

Some industry observers have remarked that the Jetstar-AirAsia announcement was timed to dampen the mood ahead of Tiger's listing, and Davis appears to concur after saying that his carrier's rivals were pulling a publicity stunt.

Subsequent actions by AirAsia and Jetstar show that they appear to be at "complete loggerheads" with what they set out to do, he adds.

For example, in late January, Jetstar announced an order for International Aero Engine IAE V2500 engines for the 50 Airbus A320s it has on order. "Guess what, AirAsia uses CFM (engines)," Davis points out.

In addition, AirAsia said in February that it would establish a presence in Vietnam by buying a 30% stake in Vietnamese start-up carrier VietJet. This could go up against Jetstar's Vietnamese associate, Jetstar Pacific. AirAsia's move was "not exactly harmonious", says Davis, who adds: "The reality of the stunt has been exposed."

Tiger, he adds, is not about spending money on marketing itself like AirAsia has with Formula 1 and football sponsorships.

"We want to focus on our business. We are not driven by ego. We are not driven by me being the brand," says Davis. "We are about making money it's about what gives me the best bang for my buck. We take punctuality very seriously, we take not cancelling flights very seriously, we take not losing your suitcase very seriously. But beyond that, other than getting you there safely, you are not going to get a lot of service."

The proof was in the financial results, he adds. Tiger made a net profit of S$14.1 million for the quarter ending 31 December, and says that both its Singapore-based and Australia-based operations were in the black.

"We had a 17% operating margin on a fleet of 17 aircraft. Our competitors don't [have that]. We are a transportation company, which is focused on offering our customers the lowest possible airfares and giving our investors the best return on their investment.

"The airline industry historically, has made the big mistake of over-promising and under-delivering. With Tiger, we try to do the reverse. We under-promise and over-deliver."